The perception that hardship bearing down on individuals is due to coercive action by a remote foreign power can lead to serious civil unrest. We should not be reluctant to look again at the world crisis of 1930 – 1933 for lessons in understanding what is happening in Greece, Spain, Portugal and Italy.
The German volk memory still retains the appalling consequences of the demands by the French for reparations for the damage caused in WW1. To enforce payment Poincaré, the French premier, occupied the Ruhr in 11 January 1923. But his central concern was not German defaults on coal and timber deliveries but the sanctity of the Versailles treaty which imposed on Germany severe penalties, loss of territory and privation. Poincaré was not himself as supportive of reparations as he was of preserving the Treaty fearing that German breach of its terms would result in wholesale assault on it.
The demand for reparations so enforced led directly to the German hyperinflation of 1923 which remains a scar in its peoples’ memory. So appalling were its consequences that when economic crisis impaled the German nation in 1932 its people were ready to accept an explanation of its causes that was wholly false. It was Hitler’s success in ascribing the people’s sufferings to what he asserted were the crippling terms of the Versailles settlement that accounted for the wave of electoral support leading to his Chancellorship in January 1933.
None of this was true. The 1930/33 crisis was not caused by hyperinflation or by the Versailles treaty or indeed by the Wall Street crash. It was caused by bank failures resulting from severe monetary contraction, illiquidity and panic. Indeed the banking crisis of late 1930 owes much to the fear engendered by failure of Bank of United States – itself the result of panic. In the USA 125 banks were suspended during 1931 alone.
Yet the perception of the harrowing effects of the 1923 hyperinflation is what dominated in 1930/33 during Hitler’s democratic progress to power. We can all see that it still dominates German policy. It is this that determines their view of the Euro and the conduct of Eurozone countries. All that the Germans are requiring is that Greece and those states confine expenditure to revenues, debt to a sustainable proportion of GDP and that their peoples should pay their taxes. This is not austerity but the imperative restraint of insupportable gratification.
But when seen from Athens and, by extension, Rome and Madrid, the cause of their privations is now being depicted as due to constraints imposed by a dominant foreign power whose leaders were not elected by the Greek people, who cannot be displaced by any Greek vote and whose demands cannot be resisted.
Such a victimised mental bias is very dangerous. It blinds reason. A state of mind suborned by such distortions of reality is one that history has shown us can bring disaster and the fear of catastrophe.